The Class Action Weekly Wire – Episode 51: 2024 Preview: TCPA Class Action Litigation


Duane Morris Takeaway:
This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jennifer Riley and associate Derek Franklin with their discussion of 2023 developments and trends in TCPA class action litigation as detailed in the recently published Duane Morris TCPA Class Action Review – 2024.

Check out today’s episode and subscribe to our show from your preferred podcast platform: Spotify, Amazon Music, Apple Podcasts, Google Podcasts, the Samsung Podcasts app, Podcast Index, Tune In, Listen Notes, iHeartRadio, Deezer, YouTube or our RSS feed.

Episode Transcript

Jennifer Riley: Welcome to our listeners! Thank you for being here for our weekly podcast, the Class Action Weekly Wire. I’m Jennifer Riley, partner at Duane Morris, and joining me today is associate Derek Franklin. Thank you for being on the podcast.

Derek: Thank you Jen! Happy to be part of the podcast.

Jen: Today on the podcast we are discussing the recent publication of the inaugural edition of the Duane Morris Telephone Consumer Protection Act (or TCPA) Class Action Review. Listeners can find the eBook publication on our blog, the Duane Morris Class Action Defense blog. Derek, can you tell listeners a bit about the publication?

Derek: Absolutely Jen. The TCPA has long been a focus of litigation, particularly for class actions. To that end, the class action team at Duane Morris is pleased to present the TCPA Class Action Review – 2024. This publication analyzes the key TCPA-related rulings and developments in 2023 and the significant legal decisions and trends impacting this type of class action litigation for 2024. We hope that companies will benefit from this resource in their compliance with these evolving laws and standards.

Jen: In 2023, courts across the country issued a mixed bag of results leading to major victories for both plaintiffs and defendants. Derek, how often were classes certified in TCPA actions in 2023?

Derek: There were wins on both sides, but the plaintiffs’ bar came away ahead in terms of getting classes certified. Courts granted motions for class certification nearly 70% of the time, and denied class certification motions only 30% of the time in 2023.

Jen: Interesting and a fairly high certification rate for these cases. Another notable legal issue that courts grappled with in the context of the TCPA during 2023 is the threshold for what can constitute a concrete injury for purpose of having Article III standing to bring a viable claim. Were there any notable rulings in 2023 that discussed Article III standing?

Derek: Yes Jen, there were several rulings that discussed these very issues in the TCPA Class Action Review. In Drazen, et al. v. Pinto, for example, the Eleventh Circuit ultimately concluded that a single unwanted text message may not “be highly offensive to the ordinary reasonable man,” but it was nonetheless offensive to some degree to a reasonable person. The Eleventh Circuit ruled that the harm of receiving one text message shared a close relationship with the harm underlying the tort of intrusion upon seclusion, and thus, receipt of an unwanted text message causes a concrete injury sufficient to confer Article III standing.

Jen: Thanks so much Derek, I anticipate that these standing questions will remain hotly debated in the courts in 2024. The Review also talks about the top TCPA settlements in 2023. How did plaintiffs do in securing settlement funds last year?

Derek: Plaintiffs did very well in securing high dollar settlements in 2023. The top 10 TCPA class action settlements totaled $103.45 million.

Jen: We will continue to track those settlement numbers in 2024, as record-breaking settlement amounts have been a huge trend we have tracked the last two years. Thanks Derek for being here today, and thank you to the loyal listeners for tuning in! Listeners please stop by the blog for a free copy of the TCPA Class Action Review e-book!

Derek: Thanks for having me Jen and thanks to all the listeners!

U.S. Supreme Court Holds That Application Of The FAA’s Transportation Worker Exemption Turns Upon The Work Performed And Not The Employer’s Industry

By Eden E. Anderson, Rebecca S. Bjork, and Gerald L. Maatman, Jr.

Duane Morris Takeaways:  On April 12, 2024, the U.S. Supreme Court issued its decision in Bissonnette v. LePage Bakeries Park St., LLC, Case No. 23-51 (U.S. Apr. 12, 2024), holding that application of the transportation worker exemption in the Federal Arbitration Act (“FAA”) turns upon the work performed by the plaintiff and not the employer’s industry.  The Supreme Court made clear, however, that this work-focused test should not bring within the exemption large swaths of workers who in some manner engage with products in the flow of commerce.  The Supreme Court opined that the worker at issue must play a “direct” and “necessary” role in the free flow of goods across borders.  Id. at 9. For employers with workplace arbitration agreements, the Supreme Court’s ruling is a required read.

Case Background

The defendant in Bissonnette produced and marketed baked goods, with its products made in 19 states and distributed across the country.  The plaintiffs were franchisees who contracted with the defendant to distribute the products in local markets.  The plaintiffs also advertised the products, identified retail buyers, and performed services for those retailers, including stocking and inventory.  When the plaintiffs filed a putative wage and hour class action, the defendant sought to compel arbitration and to dismiss the class claims, citing a contractual arbitration provision with a class action waiver.

The district court granted the motion and the Second Circuit affirmed.  The Second Circuit reasoned that, because the plaintiffs’ work was performed in the baking industry and not the transportation industry, the FAA’s transportation worker exemption did not apply.  The transportation worker exemption provides that the FAA “shall not apply to contracts of employment of seamen, railroad employees, or any other class of worker engaged in interstate commerce.”  9 U.S.C. § 1.

Immediately after that decision, the U.S. Supreme Court issued its decision in Southwest Airlines Co. v. Saxon, 596 U.S. 450 (2022), wherein it held that the test to be employed in assessing application of the transportation worker exemption is based on the work performed by the plaintiff and not the employer’s industry.  Nonetheless, on panel re-hearing, the Second Circuit adhered to its prior decision on the grounds that the transportation worker exemption still did not apply because the defendant’s business was to distribute baked goods into commerce and not transportation services.

The U.S. Supreme Court then granted review.

The Supreme Court’s Decision

As it did in Saxon, the Supreme Court emphasized in Bissonnette that the test for application of the transportation worker exemption focuses on the work performed by the plaintiff and not the employer’s industry.  Addressing the employer’s argument that such a test would make virtually all workers who load or unload goods, such as pet shop employees and grocery store clerks, exempt transportation workers, the Supreme Court disagreed. It determined that the exemption has never been interpreted to apply in such a limitless basis.  The Supreme Court emphasized that, for the exemption to apply, the worker “must at least play a direct and necessary role in the free flow of goods across borders.”  Bissonnette, at 9.  The Supreme Court thus vacated the order compelling arbitration and remanded for further proceedings.

Implications Of The Decision

Seemingly feeling its decision in Saxon was being misapplied, the Supreme Court’s ruling in Bissonnette confirms that the FAA’s transportation worker exemption turns upon the work the plaintiff performs and not on the employer’s industry.  Thus, an employer cannot seek to compel arbitration and avoid application of the transportation worker exemption by arguing that it is not in the transportation industry.  Rather, an employer’s arguments against application of the exemption must focus on the work the plaintiff performs.

Pennsylvania Federal Court Dismisses Data Privacy Class Action Based On Lack Of Standing

By Gerald L. Maatman, Jr., Jesse S. Stavis, and Ryan T. Garippo

Duane Morris Takeaways: On April 5, 2024, Judge Marilyn J. Horan of the U.S. District Court for the Western District of Pennsylvania granted defendant Spirit Airlines’ motion to dismiss in Smidga et al. v. Spirit Airlines, No: 2:22-CV-0157 (W.D. Pa. Apr. 5, 2024). Plaintiffs alleged that Spirit had invaded their privacy and violated state wiretapping laws by recording data regarding visits to Spirit’s website, but the Court held that they failed to plead a concrete injury sufficient to establish Article III standing. The ruling should serve as a reminder of the importance of considering challenges to standing, particularly in data privacy class actions where alleged injuries are often abstract and speculative.

Case Background

Like many companies, Spirit Airlines uses session replay code to track users’ activity on its website in order to optimize user experience. Session replay code allows a website operator to track mouse movements, clicks, text entries, and other data concerning a visitor’s activity on a website. According to Spirit, all data that is collected is thoroughly anonymized.

The plaintiffs in this putative class action alleged that Spirit violated numerous state wiretapping and invasion of privacy laws by recording their identities, travel plans, and contact information. One of the plaintiffs also alleged that she had entered credit card information into the website. All three plaintiffs claimed that the invasion of privacy had caused them mental anguish and suffering as well as lost economic value in their information.

Spirit moved to dismiss based on a lack of standing under Rule 12(b)(1) and failure to state a claim under Rule 12(b)(6).

The Court’s Ruling

The Court dismissed all claims without prejudice. It held that the plaintiffs had failed to establish standing. Under Article III of the U. S. Constitution, a plaintiff must establish that he or she has standing to sue in order to proceed with a lawsuit. The standing analysis asks whether: “(1) the plaintiff suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.” Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016).

Spirit argued that the plaintiffs had failed to identify an injury in fact because they did not suffer any concrete injury from the recording of session data. The court accepted this argument, noting that absent a concrete injury, a violation of a statute alone is insufficient to establish standing: “Congress [or a state legislature] may not simply enact an injury into existence, using its lawmaking power to transform something that is not remotely harmful into something that is.” Smidga et. al v. Spirit Airlines, Inc., No. 2:22-CV-1578, 2024 WL 1485853, at *3 (W.D. Pa. Apr. 5, 2024) (internal citations and quotation marks omitted).

Judge Horan cited over fifteen recent cases where federal courts denied standing in similar circumstances to demonstrate that the mere recording of anonymized data does not satisfy the constitutional standing requirement. Further, the Court reasoned that a website’s “collection of basic contact information” is also insufficient. Id. at *4. However, the Court did note that recording credit card data without a user’s authorization might be sufficient to establish standing. Id. at *5. In Smidga, one plaintiff alleged that she had entered her credit card information, but Spirit insisted that no personally identifying information had been stored. Because plaintiffs bear the burden to prove standing, the Court found that the mere assertion that a plaintiff entered her credit card information into a website was — absent allegations that her personalized data was tied to that information — insufficient to confer Article III standing.

Having dismissed the case for lack of standing, the Court did not analyze Spirit’s arguments under Rule 12(b)(6) for failure to state a claim. The court did, however, grant the plaintiffs leave to amend their complaint.

Implications For Companies

The success or failure of a class action often comes down to whether the putative class can achieve certification under Rule 23. Nonetheless, Rule 23 challenges are not the only weapon in a defendant’s arsenal. Indeed, a Rule 12(b)(1) challenge to standing is often an effective and efficient way to quickly dispose of a claim. This strategy is a particularly potent defense in the data privacy space, as the harms that are alleged in these cases are often abstract and speculative. The ruling in Smidga shows that even if a defendant allegedly violated a state privacy or wiretapping law, a plaintiff must still demonstrate that he or she has actually been harmed.

Introducing The All-New Duane Morris TCPA Class Action Review – 2024!


By Gerald L. Maatman, Jr., Jennifer A. Riley, Emilee Crowther, and Ryan Garippo

Duane Morris Takeaway: The Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227, et seq., has long been a focus of consumer litigation, particularly for class actions. Since the TCPA was enacted 30 years ago, the methods and technology that businesses use to engage and interact with customers has evolved and changed. The trend of states enacting or amending their own mini-TCPAs shows no signs of slowing down, making this subject area a likely continued focus for the plaintiffs’ class action bar in years to come.

To that end, the class action team at Duane Morris is pleased to present a new publication – the 2024 edition of the TCPA Class Action Review. We hope it will demystify some of the complexities of TCPA class action litigation and keep corporate counsel updated on the ever-evolving nuances of these issues.  We hope this book – manifesting the collective experience and expertise of our class action defense group – will assist our clients by identifying developing trends in the case law and offering practical approaches in dealing with TCPA class action litigation.

Click here to download a copy of the Duane Morris TCPA Class Action Review – 2024 eBook.

Stay tuned for more TCPA class action analysis coming soon on our weekly podcast, the Class Action Weekly Wire.

The Class Action Weekly Wire – Episode 50: 2024 Preview: ERISA Class Action Litigation


Duane Morris Takeaway:
This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jerry Maatman and associate Jesse Stavis with their discussion of 2023 developments and trends in ERISA class action litigation as detailed in the recently published Duane Morris ERISA Class Action Review – 2024.

Check out today’s episode and subscribe to our show from your preferred podcast platform: Spotify, Amazon Music, Apple Podcasts, Google Podcasts, the Samsung Podcasts app, Podcast Index, Tune In, Listen Notes, iHeartRadio, Deezer, YouTube or our RSS feed.

Episode Transcript

Jerry Maatman: Welcome to our listeners, thank you for being here on our weekly podcast, the Class Action Weekly Wire. My name is Jerry Maatman, I’m a partner at Duane Morris, and joining me today is my colleague, Jesse Stavis. Thank you for being on the podcast – this is episode 50 of the Class Action Weekly Wire, so we’re excited to have you with us today, Jesse.

Jesse Stavis: Thanks, Jerry, always happy to be part of the podcast.

Jerry: Today we’re discussing a recent publication of Duane Morris, the inaugural issue of the Duane Morris ERISA Class Action Review, and listeners, you can find that e-book publication on our blog, the Duane Morris Class Action Blog. Jesse, could you give our listeners an idea of what they can expect from this publication?

Jesse: Absolutely, Jerry. So in the last few years we’ve seen a surge in class action litigation filed under the Employee Retirement Income Security Act, or ERISA, and 2023 was more the same. The plaintiffs’ bar continues to focus on challenges to ERISA fiduciary’s management of 401(k) and other retirement plans. To that end, the class action team at Duane Morris is pleased to present the ERISA Class Action Review for 2024. This publication analyzes the key ERISA-related rulings and developments in 2023, and the significant legal decisions and trends impacting this type of class action litigation for 2024. We hope the companies will benefit from this resource as they figure out how to comply with this evolving law and standards.

Jerry: Well, Jesse, in 2023 courts throughout the country issued what I consider to be a mixed bag of rulings – major victories for the plaintiff side, and likewise major victories for the defense side. In terms of your analysis of the case law and what occurred last year, what do you think are the key takeaways in the publication for corporate counsel?

Jesse: Well, Jerry, I’d say that motions to dismiss still play an outsized role in ERISA class action litigation. And in this respect litigators on both sides of the V are still dealing with the fallout of the Supreme Court’s decision in a 2022 case called Hughes v. Northwestern University. There was a lot of anticipation that this case would clear up some thorny issues surrounding the pleading standards in ERISA cases. Ultimately, though, the court issued a relatively narrow ruling that left us with more questions than answers. As a result, pleading standards are still very much up in the air. Now, courts have varied in how they have addressed motions to dismiss, but, generally speaking, there’s been a lot of focus on the sufficiency of the comparators that plaintiffs provide. Without more guidance from the Supreme Court, these battles are likely to continue. I will say that there were quite a few significant rulings in ERISA class actions in 2023. On the whole, the plaintiffs’ bar continued to have success, particularly when it came to fending off defense challenges to standing under Rule 12(b)(1).

Jerry: Well, I know, Jesse. In our practice we download and monitor the filings in all 50 States and in all Federal courts in these subsystem areas of law. And certainly ERISA class based litigation is a growing area, and one of the trends that I thought was important, and one of the takeaways that are very interesting for corporate counsel is the enforceability of workplace arbitration programs that have class action waivers in them, and while that might defuse the so-called atomic bomb of a class action in other substantive areas in ERISA. It’s not only so could you explain kind of the rationale on the lines of the case law that you followed in 2023 on that issue.

Jesse: Yeah, I would definitely agree that we are seeing less of an appetite to enforce these class action waivers, and that the difficulty of enforcing this waivers means that we’re really likely to see increased activity this year. There’s a very high rate of class certification – these cases in 2023 was granted 82% of the time, and of course, certification is the Holy Grail for plaintiffs’ lawyers, and that makes these cases very lucrative for the plaintiffs’ bar. I anticipate that class certification is going to remain challenging to defeat outright, and that all has to do with the nature of these claims. So ERISA plaintiffs assert that discrete types of plan mismanagement led to common injuries affecting large numbers of planned participants, and that it did it in similar ways. And, as you know, Jerry, that’s a very good recipe for class certification and it’s a good incentive for plaintiffs’ lawyers to file more of these cases.

Jerry: You used an interesting phrase that I think is spot on – the Holy Grail of these cases is class certification as I view them. The plaintiffs’ bar files them, tries to certify them, and then monetize them, because they know if a case gets certified, it becomes very, very dangerous to try and settle it, inevitably following the wake of certification numbers. What did the space look like on the ERISA front in terms of class-wide settlements in 2023?

Jesse: Well, plaintiffs did very well in securing high value settlements. In 2023, the top 10 ERISA class action settlements totaled $580.5 million – so we crossed the half billion dollar mark. And that’s a significant jump from 2022, when the top 10 ERISA class action settlements totaled $399.6 million.

Jerry: Well, those are record breaking numbers, and we’re following them in 2024. And my prognostication as they’re going to be even higher this year as compared to last year. Thank you, Jesse, and thank you to our loyal blog listeners for reading our publication and for tuning into this week’s podcast. Jesse, I sincerely appreciate you joining the show this week and for your thought leadership in this space.

Jesse: Absolutely. Thanks for having me, Jerry, and of course, thanks to all the listeners.

Open the Gates!  California Supreme Court Addresses Compensable Time At Security Checkpoints

By Gerald L. Maatman, Jr., Shireen Y. Wetmore, Nathan K. Norimoto, Nick Baltaxe

Duane Morris Takeaways: In Huerta v. CSI Electrical Contractors, Case No. S275431, 2024 Cal. LEXIS 1446 (Cal. Mar. 25, 2024), the California Supreme Court held that time spent on an employer’s premises to undergo a security check could constitute compensable hours worked; that time spent traveling on an employer’s premises may be compensable as employer-mandated travel time; and that employees covered by the Labor Code’s “construction occupation” exception to meal periods may be entitled to minimum wage for the time spent working during an on-duty meal period. As a result, companies operating in California should review and adjust their pay policies on these issues to ensure complaint pay procedures.

Case Background

Plaintiff George Huerta worked at a solar power facility in Central California that was managed, in part, by Defendant CSI Electrical Contractors (“CSI”).  Id. at 3.  At the start and end of each shift, employees waited at the facility’s entrance to partake in a security check, which included rolling down a window and showing an ID badge, a visual inspection of the vehicle, and at times, a search of the vehicle.  Id.  Huerta alleged that CSI owed him compensation for the time spent waiting to pass through the security checkpoints.  After passing through the checkpoint, Huerta then drove down the facility’s roads to reach the employee parking lot.  Huerta, again, claimed he should have been compensated for the time spent driving from the facility’s entrance to the parking lot.  Huerta was also covered by a collective bargaining agreement (“CBA”) that mandated an off-duty, unpaid 30-minute meal period.  Id.  CSI’s rules required workers to spend meal periods near their designated worksite for the shift, which Huerta alleged entitled him to additional compensation.  Id. at 4-5.

Huerta filed a wage-and-hour class action against CSI seeking unpaid wages.  He subsequently appealed his case to the Ninth Circuit, which, in turn, certified three questions to the California Supreme Court, including: (1) is time spent waiting to pass through a security checkpoint on an employer’s premises compensable time; (2) does time spent traveling from a security checkpoint to the employee parking lot constitute compensable time; (3) are workers entitled to paid meal periods when they are prohibited from leaving the jobsite during meal periods?  Id. at 1, 5.

The California Supreme Court’s Decision

Industrial Welfare Commission (IWC) Wage Order No. 16-2001 (“Wage Order No. 16”) that governs wages, hours, and working conditions in the construction, drilling, logging, and mining industries covered Huerta’s work at the facility.  Id. at 1.  To answer the three certified questions, the California Supreme Court interpreted Wage Order No. 16 as follows:

First, the Supreme Court held that under Wage Order No. 16, the time an employee spends on an employer’s premise waiting to undergo a mandatory security check could constitute compensable “hours worked” depending on the amount of “control” exercised over the employee.  Id. at 11.  The Supreme Court noted that CSI required Huerta to participate in the security check; confined him to the premises until he finished the entrance and exit procedure; and made him perform “specific and supervised tasks” of waiting in his vehicle, rolling down his window, and allowing his personal vehicle to be searched by a guard.  Id. at 9-10.  Thus, CSI exercised a sufficient amount of “control” over Huerta to render the time spent passing through the security checkpoint compensable time worked under the Wage Order.  Id. at 9.

Next, the Supreme Court held that under Wage Order No. 16, travel time may be compensable where (1) “the employer required the employee’s presence at an initial location before mandating travel to a subsequent location” and (2) “the employee’s presence was required for an employment-related reason other than accessing the worksite.”  Id. at 18.  Here, the Supreme Court offered an example of a worker who reported to an initial jobsite, retrieved work supplies, received the work order, and then traveled to a second jobsite.  Id. at 16.  Based on this example, the time spent travelling between jobsites represents compensable time.  Id.  Since Huerta and CSI offered contradictory evidence on this point, the Supreme Court declined to express a “view” on whether the facility’s security checkpoint was a “first location” that CSI mandated Huerta’s presence.  Id. at 17.

Finally, the Supreme Court held that “an employee must be paid a minimum wage for meal periods when an employer’s prohibition on leaving the premises or a particular area forecloses the employee from engaging in activities he or she could otherwise engage in if permitted to leave,” even if the employee is covered by a CBA-meal period exception under a Wage Order.  Id. at 33.  The Supreme Court did not express any opinion on whether CSI’s rules for meal periods prohibited Huerta from the leaving the facility during his 30-minute meal periods, but noted that “if Huerta’s ‘unpaid meal period’ is compensable under the wage order as ‘hours worked,’ he is entitled to seek compensation for that time under Labor Code section 1194.”  Id. at 35.

Implications For Employers

California continues to redefine what constitutes compensable time worked at the start and end of shifts.  This decision is a must read for employers with mandatory security checkpoints, and such employers are advised to review their security protocols as it may constitute compensable hours worked.

Introducing The Duane Morris ERISA Class Action Review – 2024!

By Gerald L. Maatman, Jr. and Jennifer A. Riley

Duane Morris Takeaway: The surge of class action litigation filed under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001 et seq., over the last several years persisted in 2023, with class action litigators in the plaintiffs’ bar continuing to focus on challenges ERISA fiduciaries’ management of 401(k) and other retirement plans. Plaintiffs continue to assert that ERISA fiduciaries breached their fiduciary duties of prudence and loyalty by, among other things, offering expensive or underperforming investment options and charging participants excessive recordkeeping and administrative fees. Hundreds fee and expense class actions have been filed since 2020, driven by a number of familiar plaintiffs’ class action law firms alongside some new entrants into the space.

To that end, the class action team at Duane Morris is pleased to present a new publication – the 2024 edition of the ERISA Class Action Review. We hope it will demystify some of the complexities of ERISA class action litigation and keep corporate counsel updated on the ever-evolving nuances of these issues.  We hope this book – manifesting the collective experience and expertise of our class action defense group – will assist our clients by identifying developing trends in the case law and offering practical approaches in dealing with consumer fraud class action litigation.

Click here to download a copy of the Duane Morris ERISA Class Action Review – 2024 eBook.

Stay tuned for more ERISA class action analysis coming soon on our weekly podcast, the Class Action Weekly Wire

Defendant’s Motion For Decertification Denied By Missouri Federal Court In Antitrust Home-Selling Commission Class Action

By Gerald L. Maatman, Jr. and Sean P. McConnell

Duane Morris TakeawaysOn March 26, 2024, Judge Stephen R. Bough of the U.S. District Court for the Western District of Missouri denied HomeServices of America’s (“HomeServices”) motion to decertify a class of home sellers alleging that that Defendants violated the Sherman Act by entering into a conspiracy to follow and enforce a rule adopted by the National Association of Realtors (“NAR”) that had the effect of raising commission rates in Moehrl et al. v. The National Association of Realtors et al., No. 1:19-CV-01610 (W.D. Mo. Mar. 26, 2024). HomeServices argued that the class of plaintiffs fail to satisfy Rule 23(b)(3) because trial showed that individual facts and proof predominated over common issues. The Court accepted Plaintiffs’ arguments that its expert sufficiently demonstrated a but-for world through common evidence, satisfying the predominance requirement of Rule 23(b).

Moerhl is required reading for any corporate counsel handling antirust class actions involving price-fixing allegations.

Case Background

Plaintiffs are home sellers. The Defendants relevant to the motion at bar are HomeServcies, BHH Affiliates, LLC, and HSF Affiliates, LLC. Plaintiffs alleged that Defendants violated the Sherman Act by entering into a conspiracy to follow and enforce a rule adopted by NAR, which had the purpose and effect of raising, inflating, or stabilizing buyer broker commission rates paid by home sellers from April 29, 2015, through June 30, 2022. The Court certified the class of plaintiffs on April 22, 2022, and the Eighth Circuit denied Rule 23 review requested by Defendants. In October 2023, a jury awarded $1.8 billion to the class against NAR, HomeServices, and Keller Williams, though Keller Williams had previously settled out of the litigation.

Last month, NAR entered into a groundbreaking $418 million settlement to resolve all related litigation.

The Court’s Ruling

The Court was unconvinced by HomeServices’ arguments and stuck with its initial analysis in granting class certification.

The Court reasoned that the Class’ economic expert opined that commission rates were uniformly high because of the cooperative compensation rule, without which a seller would not pay the commission of the buyer’s broker. According to the Court, trial testimony from the Class Plaintiffs further established that commission rates were uniformly high due to the cooperative compensation rule and that the higher commissions were paid during the entire class period. The Court further found that the damages model of Plaintiffs’ expert sufficiently relied on common proof by calculating the specific amount of damages for each class home sale transaction.

Implications For Defendants

Moehrl is another example of a federal antitrust class certification decision that turned on whether evidence of common, injury-producing conduct existed. The Court credited evidence capable of showing the impact of the anticompetitive conduct across all class member at trial.

Georgia Hospital Must Pay its Own Attorneys’ Fees Despite a Jury Verdict Finding that its Former Employee Did Not Act in Good Faith

By Ryan T. Garippo, Nicolette J. Zulli, and Gerald L. Maatman, Jr.

Duane Morris Takeaways:  On March 29, 2024, in EEOC v. Phoebe Putney Memorial Hospital, Inc., No. 1:17-CV-201 (M.D. Ga. Mar. 29, 2024), Judge Leslie Gardner of the U.S. District Court for the Middle District of Georgia held that even minimal evidence for the EEOC’s claims may be sufficient to find that its failed lawsuit is not frivolous. Consequently, employers may be forced to pay their own attorneys’ fees even where the claims against them are lost at trial by the Commission. The decision in EEOC v. Phoebe Putney Memorial Hospital, Inc., is well worth a read by corporate counsel facing government enforcement litigation.

Case Background

In 2015, Phoebe Putney Memorial Hospital, Inc. (“Phoebe”) hired Wendy Kelley (“Kelley”) as a medical records analyst for a shift that typically ran from Monday through Friday. Kelley, however, understood that she needed to work weekends from time to time.  Hence, when another employee went on maternity leave, Phoebe asked Kelley to cover some Saturday shifts. Instead, Kelley met with her doctor the next day to discuss an ongoing generalized anxiety disorder diagnosis.

Among other things, Kelley’s doctor recommended that she “take Saturdays and Sundays off work when she had to take an increased dose [of medication] at the end of a stressful workweek.”  Id. at 6. As a result, Kelley submitted a request under the Americans with Disabilities Act (“ADA”) and asked not to work weekends. Phoebe explained that it is “a hospital and [it is] open on the weekend” and it could not accommodate the request. Id. at 8. Phoebe did, however, offer Kelley two days off in a row to give her time to take her medication. At the time, it appeared that this solution would work for everyone. Kelley then submitted another request for time off — this time for two weeks straight — citing her generalized anxiety disorder. Phoebe denied that request and explained that it could not cover her shifts. Kelley then refused to come into work. Accordingly, Phoebe terminated Kelley’s employment.

The Equal Employment Opportunity Commission (“EEOC”), on behalf of Kelley, filed a lawsuit alleging a violation of the ADA. The EEOC asserted that Phoebe fired Kelley because of a perceived disability. Ultimately, Phoebe filed a motion for summary judgment, which was denied, and the EEOC went to trial on Kelley’s claims. The jury sided with Phoebe on the basis that “Kelley’s request for accommodation was not made in good faith,” among other findings.  Id. at 1.  This verdict prompted Phoebe to file a motion for attorneys’ fees and costs that argued the entire lawsuit was frivolous.

The Court’s Decision

Judge Gardner denied Phoebe’s request for its attorneys’ fees and costs.

The Court explained that attorneys’ fees in ADA cases can be awarded only if the claim itself is frivolous. Courts consider three factors to make such a determination, including “(1) whether the plaintiff established a prima facie case; (2) whether the defendant offered to settle; and (3) whether the trial court dismissed the case prior to trial or held a full-blown trial on the merits” along with other considerations in the Eleventh Circuit. Sullivan v. Sch. Bd. Of Pinellas Cnty., 773 F. 2d 1182, 1189 (11th Cir. 1985) (citations omitted). Additionally, even if a plaintiff’s evidence is “weak,” she may be able to defeat a request for attorneys’ fees if there is “any evidence to support [her] claims.” Id.

Based on these principles, the Court held that Kelley’s testimony, even if weak or unpersuasive, was sufficient to establish her prima facie case for the EEOC’s claim of an ADA violation. The Court relied on that testimony to deny summary judgment. The Court stated as long as Kelley had “any evidence” for her claim, the lawsuit was not frivolous. That testimony, along with some medical records, qualified as such evidence. Further, the Court explicitly noted that Phoebe “did not offer to settle” and, therefore, the Court could not determine that this factor cut in Phoebe’s favor. Id. at 8.

Implications Of The Decision

The EEOC is an aggressive litigant. This decision demonstrates that even when the Commission loses its claims, companies nevertheless may have to foot the bill for their attorneys’ fees. Establishing an entitlement to attorneys’ fees is an uphill climb.

Sixth Circuit Upholds Enforcement Of Pre-Lawsuit EEOC Subpoena Despite Alleged Procedural Defects

By Haley Ferise, Kathryn Brown, and Gerald L. Maatman, Jr.

Duane Morris Takeaways: On March 26, 2024, in EEOC v. Ferrellgas LP, No. 23-1719 (6th Cir. Mar. 26, 2024), the Sixth Circuit affirmed the decision of the U.S. District Court for the Eastern District of Michigan to enforce an EEOC subpoena over an employer’s objections. Although the employer raised both procedural and substantive grounds to challenge the pre-lawsuit subpoena, but both the District Court and the Sixth Circuit rejected those arguments. The ruling ought to be a required read for corporate counsel facing EEOC subpoenas issued as part of pre-lawsuit administrative investigations.  

Case Background

April Wells, a Black woman, was a driver for a propane distribution company. She alleged in a discrimination charge filed with the Equal Employment Opportunity Commission that she was subjected to sex discrimination based on (i) her over qualification for the position for which she was hired as compared to that for which she applied, (ii) her compensation that was allegedly lower than that of her male counterparts, and (iii) her termination. She later amended the complaint to include race discrimination claims.

The EEOC began its investigation of Wells’ claims by sending the company two requests for information (RFIs). The employer refused to fully respond to the RFIs on grounds that the scope was overbroad. As is its usual approach, in October 2022, the EEOC issued a subpoena for information the company’s hiring practices. The company objected that the subpoena was unsigned, overly broad, unduly burdensome, and not relevant to the matters arising from the charge. A month later, the EEOC sent a second subpoena, in response to which the employer reiterated its objections.

In December 2022, the EEOC applied for an order to show cause as to why the subpoena should not be enforced, which was granted with a deadline of February 24, 2023. The company responded that (i) the EEOC improperly served the subpoena on the wrong corporate entity and therefore the company had not forfeited its right to challenge the subpoena, (ii) the EEOC could not show the relevance of its subpoena, and (iii) gathering and producing the information sought would be “unduly burdensome.” Id. at 4. The District Court rejected all of the company’s arguments, and it subsequently appealed.

The Sixth Circuit Decision

On appeal, the Sixth Circuit affirmed.

On appeal, the employer raised a new issue of improper service, claiming that the EEOC was required to mail the subpoena to the company itself or utilize another method enumerated in the National Labor Relations Act (NLRA), as the EEOC is authorized to do under Title VII. The Sixth Circuit found that, after directing the EEOC to communicate with its defense counsel, the company could not defeat service via its outside counsel that complied with its own request and that the company’s strict interpretation of the NLRA was erroneously narrow.

In response to the company’s argument that EEOC’s addressing its subpoena to the wrong corporate entity rendered the subpoena invalid, the Sixth Circuit ruled that such an error did not prevent the employer from raising its objections sooner and that the error was harmless, thereby not “preclud[ing] the district court from enforcing the subpoena.” Id.at 7.

At the same time, the Sixth Circuit rejected the EEOC’s argument that the employer had forfeited the right to object to the subpoena because of the company’s allegations the “the EEOC … failed to properly serve a facially valid subpoena.” Therefore, it addressed the company’s substantive objections. The Sixth Circuit reasoned that the District Court did not “abuse its discretion in rejecting” the employer’s arguments that the subpoena was “overbroad and unduly burdensome.” Id. at 11-12. The Sixth Circuit explained that Wells’ charge of discrimination did in fact concern hiring practices in light of her allegations related to discriminatory remarks in the interview process and that, even if the charge did not directly concern hiring practices, information about hiring processes “could cast light on whether [the employer] discriminated against other job applicants.” Id. at 12-13.

Finally, the Sixth Circuit agreed with the District Court that the company did not meet its burden in demonstrating that compliance with the subpoena presented an undue hardship.

Implications Of The Decision

Employers facing administrative subpoenas from the EEOC should be aware that clerical errors or even questionable service likely will not be sufficient to defeat the subpoenas. A better practice is to raise substantive objections to such subpoenas in a timely and formal manner.

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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